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Day of reckoning for customs union’s fate

Business Day, South Africa

Day of reckoning for customs union’s fate

By Mathabo le Roux, Trade and Industry Editor

31 October 2008

The Southern African Customs Union (Sacu) council of ministers is gathering in Windhoek today for a meeting that is likely to be dominated by the acrimonious Economic Partnership Agreement (EPA) negotiations with the European Union (EU).

The meeting takes place before next week’s crucial round of EPA talks in Brussels, and the Sacu secretariat yesterday said a common position would be discussed.

There is great anxiety among Sacu members that SA may opt to break up the customs union if they press ahead with the EPA.

SA has consistently refused to sign the EPA, citing its onerous demands, and it appears that its appetite has waned even more in recent months. With political power in the ruling African National Congress shifting to the left, it is expected that SA’s trade policy will become more protectionist, particularly in relation to western powers such as the EU.

“SA is quite determined not to sign the EPA and not to have the others (Sacu members) sign it. It is now holding up the revenue from the customs pool as a trade-off. The situation is very tense,” a source close to the talks, who declined to be named, said.

SA trades with the EU under the Trade, Development and Co-operation Agreement but the standoff over the EPAs has put Botswana, Namibia and Swaziland in a difficult position. These countries previously traded with the EU under the Cotonou Agreement, but the EPAs had to replace Cotonou at the beginning of this year to align it with World Trade Organisation (WTO) rules.

A trade economist earlier this week confirmed that Sacu had sought legal opinion on the matter and it was confirmed that the countries had no option but to sign the EPA to avoid a WTO challenge.